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SAP ERP Cloud Computing – SaaS Solutions

SAP is the world’s largest used enterprise resource planning solution that provides solutions for business process automation based on industry best practice standards. Given the IT service industry shift from Shared Services to Utility based ICT services, SAP has come up with two suite of SaaS solutions.

SAP Business By Design

SAP Business by design is focused on providing large organization’s subsidiaries and small & medium enterprises a full application suite that can help automate their idea to market, market to order and order to cash business processes while still paying based on usage instead of huge deployment costs. It gives them flexibility to configure functionality they need including Analytics and reporting that complete the full suite.

SAP Business One Cloud

SAP Business One Cloud is focused on providing small organization’s an application suite that can help automate their marketing, sales, delivery and service processes while still paying a low fees based on usage instead of huge ICT costs. The suite is preconfigured and ready to use for small size organisations. Being a cloud based solution it allows small businesses to become flexible and IT ready while giving them scalability to ramp up usage based on need.

CONCLUSION

Cloud Computing has started in past decade as a natural transition from ICT Shared Services to ICT Utility based services. The use, need and availability of Internet has made ICT traditional services transition to Cloud Computing service even more faster.

Cloud Computing Service benefits are now out weighing the issues faced and most the issues faced are by and large overcome by service providers. Cloud computing services are being adopted by most organisations and the adoption continues to increase every year.

Its clear that cloud computing services and specially SaaS solutions would continue to grow as this allows the organisations to become agile in adopting new solutions while reducing ICT investments and paying for use only.

The existing SAP ERP SaaS solutions are targeting and meant for use by SMEs and Smaller organisations. SAP has to look into how it can create an offering for even the large size organisations traditional SAP ERP solution to SaaS SAP ERP solution. Delay in doing so could result in lost opportunity e.g. in saleforce.com is a fast growing SaaS offering for CRM solutions and many organisations are adopting it.

Lastly Cloud Computing Services open a vast opportunity for service providers to build and offer new internet based services and solutions that can help organisations achieve their goals.

Benefits of SaaS Service Model

Cloud Computing SaaS Model offers the full stack of ICT service and full stack means it delivers an IT Solution for the organisation. The key benefits of SaaS service model can be listed as follows,

One Standard Solution: SaaS solutions are made using industry standard best practice business processes for making them adaptable and fit for entire industry. The SaaS solution offering is standard and available across the whole organisation for use based on needs. This gives the organisation real time usage across the world and more importantly saving ICT costs of duplicate or different solution at different locations.

Self Service Model: SaaS solution offering works on self-service model where by the business users can choose and pick the services options they need. The solution support issues are also self-service based making the business users to check and receive support from one central support.

Pay for Use: SaaS solution offering allows organisations to pay for use, it means organisation do not incur or worry about ICT additional costs as they pay only for number of users using the specific service(s).

Reduced Costs: SaaS solution offering allows organisations to reduce their ICT capital expenditure costs as the solution is ready to use and minimal to no upfront investment required to start using the SaaS solution. On the other hand as there is no ICT Infrastructure and other components ownership, the organisation only incurs the usage costs and has ease of ramp up and ramp down usage, thus allowing higher flexibility.

Faster Time to Market: SaaS solution offering reduces the time for preparation and deployment to the lowest possible as the solution is available for use and requires minimum configuration, setup and user training time to start using the solution. As the whole organisation uses only one solution any changes or new functionality can be also introduced in one go to the whole organisation.

Standard Interfacing: SaaS solution offerings are used by multiple organisations so these are made using industry standard best practices processes and ICT standard for cross system communications and message exchanges. This makes organisations to connect with their customers and consumers in a standard and easy to use way.

Issues of SaaS Service Model

Cloud computing and SaaS service offering by service providers is still evolving. The key issues of SaaS service model can be listed as follows,

Security: Security is the key concern for all organisations that think of SaaS Service adoption. This emerges from the fact that everyday unsecured internet sites and at times even the highly secured internet sites are hacked and data is stolen. SaaS service offerings are internet based and concerns organisations have is about securing their identity and organisation data.

Standards: Cloud computing and SaaS offerings are still evolving and along with them the standards for such services are also still evolving. Type of clouds and mashing of multiple providers e.g. SalesForce.com offering Saas Channel CRM solution while using Amazon IaaS / PaaS service to host it.

Big Data: Data Management is a growing concern for all organisations and its specially an issue for SaaS service solution as the organisation does not own any solution component and pays only of usage of the services. The concern is how the data captured can be stored in organisations data warehouse with ensuring that the data is encrypted while exchange and securely stored as well as usable for generate reports and insights required for decision making.

Change: While adoption of SaaS service is fairly simple, the concern and issue is of switching from one SaaS solution to other and how the transition as well as underlying information exchange from one vendor to another vendor to be handled.

Strategy and Governance: For Cloud Computing Service adoption organisations must have a clear strategy and governance structure and processes. Strategy will help identify in what areas what types of cloud services can be adopted while governance will help ensure clear understanding of roles and responsibilities, compliance and risks.

Cloud computing is opening doors for businesses and organisations to have IT services available as utility service with predictable cost and quality as per customer needs and pay for use models while still allowing flexibility of needs based selection of SaaS, PaaS, IaaS service and its components.

IT is becoming an essential part of companies DNA and Fabric as organisations realize that ICT services and solutions will give them a competitive edge to achieve their growth using real time information and insights as well as making products and services available using digital presence. Organisations are awakening and becoming to redefine their strategies to become a real time company, at the core of this is IT but now its not just another IT project but a business transformation enabled with word class IT solutions and services.

In most organisations ICT services are already served as Shared Service Model for past decade and organisations have become mature in having ICT services delivered using shared service model. The move from Shared Service Model towards Cloud Computing is a natural progression where organisations go from Shared Services to Utility Services model.

Internet and the need for doing things online and real time is now well embedded in most organisations as well as consumers. This is leading towards having ICT services being available through internet around the clock and in a secured manner. Could Computing Services and Service Model is fulfilling this need.

Forrester Research white paper of he Evolution Of Cloud Computing Markets” of july 2010 shows that organisations are spending around USD 2.4 Trillion for ICT services. Cloud computing is opening up a new space where the organisations will transition towards. A big part of the overall ICT spending would be moving towards cloud computing services. A macro shift of services already began from year 2009 and its expected to grow rapidly in coming year.

The report from delloite consulting of year 2009 suggests that cloud computing services would grow to the size of USD 1 Trillion in current decade and would continue to grow further. Cloud Services offerings from major players like Microsoft – Office 360, Azure and SAP – Business By Design and Business One Cloud and Amazon EC2 and S3 will lead the transition of Traditional ICT services and solutions to Cloud SaaS, PaaS and IaaS services.

Cloud Computing Services are on number 4 position of IDC’s Top 10 Predictions report of 2012. IDC report suggests that Spending on public and private cloud services, and the building of those services (the “cloud arms dealer” opportunity), will reach USD $60 billion. Amazon will join the $1 billion IT vendor club, and the strategic focus in the cloud will shift from infrastructure to application platforms and the race to build the largest portfolios and ecosystems around those platforms.

The term cloud computing came in existence is last decade while the concept and types of cloud computing services existed in one or the other form for past two decades. The name cloud computing is given to specify that organisations don’t have to worry about where there IT Infrastructure and Application Software are hosted, instead organisations can focus on the IT services they need to meet their fast changing customer requirements.

In past three decades business process automation has gone to the extent that IT has become a key part of all business transformation initiatives to help automate and enable the organisations to achieve their goals. IT services are more and more seen similar to utility services that are reliable, scalable and paid by usage. Cloud computing is also focusing on provide IT services as utility while keeping in mind that utility service needs vary from organisation to organisation. E.g. The power supply and water are the generic utility services and full fill basic need of electricity and water for the customer. But as the need for customer varies so the utility services vary and accordingly the service costs. The need of an industrial organisation is different to the need of an individual customer.

Cloud Computing focuses on providing IT services as utility services and has three types of service offerings which are briefly explained below,

SaaS – Software as a Service : SaaS offering covers the full stack of IT from the hardware all the way up to the software application service. The service is focused on pay for use and generally operates on the pay per use based on number of users and duration of use. E.g. Microsoft Office 360 costs $30 per user per month for online office application software usage.

PaaS – Platform as a Service: PaaS offering covers the IT stack up to providing a platform that business can use to build / manager their own applications. This service is also focused on pay for use and operates based on type of platform and number of applications to be run on the platform as well as any value added service additions. E.g. A company offering PHP and My SQL platform that can be used by organisations to build and host their own applications.

IaaS – Infrastructure as a Service: IaaS offering covers the IT stack upto the Infrastructure layer, in simple words up to Operating System level. The service is also focused on pay for use and operates based Infrastructure usage like hardware and storage. E.g. Hosting providers like Rackspace, Amazon and T-systems offering standardized, virtualized and secured infrastructure hosting that individuals as well as organisations can use for hosting their application platform and application software solution.

The world markets and business changes are getting more and more dynamic every day. This leads to continuous business change and expectation to have change deployed in the shortest and fastest time frame possible with required agility and flexibility of business processes.

Given the speed of change and the part Information and Communication Technology is playing we have seen the need for how IT system changes are dealt with and executed. Business is constantly asking IT to make the IT system changes faster and faster while still ensuring quality, cost and time needs are efficiently managed.

A major part of IT system change execution is related to how its programs and projects are executed. The traditional project management methodologies and IT projects water fall method of executing and delivering project outcomes are not helping. The key reasons for water fall approach not working are,

Business changes are dynamic and time to get the change done is shorter means even business doesn’t have the complete idea of every details of the product. Hence requiring faster iteration of part of the product benefits to build on the next set of requirements.

The waterfall method of executing IT projects lead to long project execution cycle that relies on 100% clear business change requirements and detailed product requirements. This requires longer time to get things documented, designed, built and then longer testing, fixing and deployment times.

With traditional waterfall project execution there is lost opportunity for improving the product as the business gets to see the product only at certain stage of the project by when there is not much room for changes given the need for speed.

In traditional waterfall projects the business is unable to make interim decisions stopping the project or changing its path at any stage of the project for better product creation by saving time and cost spending.

The above reasons lead to the need of a new IT projects/programs execution methodology. In 1990s a new methodology emerged called SCRUM which gives the required agility in any IT product delivery. The methodology was more tried and used in early 2000 and last decade by big software development vendors that continuously work on software product development and releases.

SCRUM focuses on products delivery by delivering its prioritised features in smaller (2 to 4 weeks) iterative cycles known as sprint. Each sprint delivers a set of working product features to the product owner for testing and releasing it to production. The whole agile development cycle continues as iterative sprints until the entire product with all its features are delivered to the product owner.

As each sprint (iteration) is of maximum 4 weeks, the product owner at the end of each sprint has authority to approve the next sprint or cancel and stop further product development. The product owner also has authority to change product priorities and add or remove features to the product and hence allowing the agility and flexibility of product development.

There are other positive points of SCRUM (Agile) way of product development. The sprint is delivered by a team working on that sprint. The team has required skilled resources that choose the activities themselves and create a complete sprint plan. The team appoints one of the team members as SCRUM Master who ensures that every single day the team members update each other and SCRUM Master help to remove any roadblocks for a successful produce delivery. The entire team is responsible for product delivery and if a sprint is successful then it’s due to the entire team and when it fails the team notes down the downsides and work on improving it in next sprint.

All in all SCRUM (Agile) way of doing IT projects can be successfully used for all the projects/programs that are planned to deliver products. It’s said that by 2015 at least 80% of IT projects would be using SCRUM (Agile) way of doing projects. So the earlier we start using the better. Even if 70% of IT projects are done in SCRUM (Agile) way then it would do wonders for business change projects.

More then ever the businesses are getting automated and enabled using IT solutions. Every part of the organisation are dependent on one of more IT solutions, some in house and some bought from the market. The IT solutions are made with the need for enabling the business and often leaving the useful ones rest are forgotten and left as legacy/archives to be referred only when needed.

With fast changing business needs applications are created, used and left even faster then we all could think about. Day in and day out business creates document libraries, project team rooms, intranets and a lot more. Over years this turns out to be a huge mess and close to unmanageable. The result is higher maintenance and infrastructure costs. Legacy / archive appls, as they are hardly used result in Loss of knowledge.

In the era of acquisitions and disentanglements to speed up innovation and change business directions, its even more essential to ensure companies have defined and controlled solution catalogue which is well managed and serviced.

For MNCs this is extremely essential as MNCs have multiple office locations, the applications appear like mushrooms in those locations and then grow into a huge architectural and landscape mess to manage and maintain. The issue starts with slight differences in global and local process and document needs. Ones allowed localize the changes continue one after another leading into a fully customized monster application and that too not just in one location but many. The result is enormous costs to maintain, control and change business applications and processes.

Application convergence can be addressed by addressing the following in order mentioned,

Bottom Up Dos

Ensure the As is application portfolio is clearly documented with ownership from IT and business

Get the collected data well categorized by business process, functions, platforms, location etc.

Create some data analysis and reports showing number of applications in different dimensions of the categories to be able to see the duplicates, expenditure and other information useful to make decisions.

Ensure the 1st hand bottom up approach analysis and output is shared with the top management and local businesses alike in condensed and relevant manner.

Identify the champions that helped in bottom up approach and they should be used for the application convergence activities going forwards.

Identify the road blockers and how they can be kept in control or convinced that application convergence is good for the whole organisation

Ensure during the whole process that current business and activities are not affected as they will create –ve publicity and barriers for progress

Top Down Dos

At the company level define the Application convergence initiative ensuring full business buy in and management support throughout the organisation

Start with the Business process layer to define the core business processes. Ensure core functions, business processes are well documented and have clear global ownership.

Short list and select the required architecture and portfolio management tooling as these would be needed for ongoing use, structure, control and management.

Business process by business process start harmonizing the processes and select the best solutions from existing ones or new ones (from the market or built in house)

Focus on quick wins by choosing the valuable but easy transitioned business processes and start filling up the solution catalogue with global solutions. This also means start closing down by transitioning old solution towards new ones and launching them as one global solution

Focus on clean ups that can aid to reduce the infrastructure and maintenance costs and hence result in better use of resources across organization

All new business demands should fit in to new way of working with only one solution at company level.

Another important point to keep in mind is Application convergence in MNCs could take from up to 1 to 5 years although a lot will be achieved in 2 years while the complex applications convergence would require a lot of time and efforts and proper strategic planning to make it happen with business change.

If the above is done in write order with proper management support and control then it ideally should lead to globalised solutions which if made with agile and service oriented architecture would result in agility to cope with business process and tools changes done fast enough and efficiently across the organisation. On the other hand running application convergence will lead to whole IT landscape clean up and steam lining ideally resulting in savings.

In the era of fast changing world where there is hardly time to catch up breath, we still must care about the core and that is business process management. Business process management is used around identifying and documenting core business processes within the organisation. It also focuses on everything around core business process like roles, responsibilities, time taken from A to B, inputs required and outputs expected.

Although a lot has been done by companies to manage business processes effectively, identify core ones to keep in house and noncore to outsourced to manage through the vendors. With all the more fast changing needs and directions of business is making companies to increase their focus on business process management.

Business process management is important and seen useful because of following,

Good business process management ensures,

Great returns in terms of process automation and use of technology to enable & enrich the business user’s experience

Agility to be able to identify and change as per changing business needs

Ability to create one understanding of the business process flow across the organisation

Ability to identify and outsource or buy business as a service for non core business processes

Ability to better control and comply with audits and regulatory needs

Bad business process management leads to,

Poor response to changing business needs requiring business process change

Agility to adapt only for local situation leading to duplicity and unmanageable change

Duplicate business processes and their automation for various locations due to slightly different adaptation in different places

Increased business process management, trainings and IT costs

Unclear understanding of business processes would lead to control, compliance and regulatory issues

No matter how fast the change becomes, its still very essential to have full ownership and effective business process management in place. The value of the same is long lasting and could be the make or break of the success of the company.

Cloud computing has started in the decade of 2000 and has been becoming a future of Data Centre Hosting. It is closely linked to the term “Platform as a Service” for infrastructure hosting related solutions. It aims to make the business Asset Free and move them towards Pay as you Go model. Given the dynamic economic situations, growth in number of internet sites and growing number of individuals becoming self made entrepreneurs is igniting the need for Cloud Computing and Cloud Hosting solutions.

Cloud computing is the buzz word and real good thing for individuals, small and medium enterprises. The need for individuals, small and medium enterprises is driven by low cost, pay as you go strategy while they don’t have to take care of assets, facility and services. They simply buy the so called Utility services from existing cloud solution providers and start using the hosting almost instantly. The challenge still remains on ensuring the effective use of cloud solutions in the right manner. Like all technology changes the cloud solutions are also evolving and it will take some more time for people & businesses to get use to the Cloud solutions effective use for their needs.

For the multinationals (MNCs), cloud computing and hosting are still seen as risky as well as time consuming in terms of transformation from existing asset based data centre hosting to cloud hosting solutions. The MNCs are moving towards private cloud solutions that enable their businesses with high secure cloud solutions based on their needs. For MNCs the other challenges are,

Multiple locations with all sizes of office, small, medium, big, requiring different scale of solutions and accessibility needs

Latency issues due to remote users, remote sites, 3rd party access

Multiple vendors involved in IT end to end service delivery chain

Every changing speed of acquisition and disentanglements due to dynamic economic situations and drive for growth

Wide variety of application platforms resulting in complex hosting needs and making upgrades even more difficult

Multiple new and change projects in IT service delivery chain

Scattered or Consolidated but too big, multiple billing within IT service delivery chain from various vendors

Loss of touch and feel (Control) over assets and their management

Multi company shared datacenters can pose security and control risks if not managed properly

Like all new innovations Clould Computing/Hosting is also a good thing from future perspective and is evolving. Companies are preparing to be ready for the next versions of cloud computing/hosting solutions. In few years from now the real view and use of cloud computing will come to light as more and more businesses/individuals start to use it and demand/suggest/ask for improvements in services.

IT continues its drive to add value by enabling the businesses and co creating business. It is one of the important enablers of competitive strategy for businesses. The traditional application development and lifecycle management still continues amidst approx 10 to 20% applications are taken and used standard out of the box. There are around 1 to 3% applications moving in direction of “Software as a Service”, pay for use.

While all of the above is evolving we have seen that our so called Smart Phones are becoming more and more powerful with ability to run most of the internet browsing capabilities as well as mobile platform for application development.

With iOS and Android’s ease of use to create mobile applications, we have seen a very high rise in individual mobile applications enabling us in all areas of life. Apple has millions of these appls sold and these come for as low as 1USD per user. Android based applications are increasing as well and used on various mobile platforms.

This is the start of applications becoming commodity / utility and it means that for all day 2 day applications as well as collaboration applications will move towards mobile platform and available on internet round the clock at very low cost and used in very high volumes.

On the other hand the business specific applications are moving towards pay for use “Software as a Service” model. A few examples of the same are, Concur for expense management, Salesforce.com for order management. SAP, Microsoft and Google are also working on creating Pay for use applications which are low cost, transaction driven applications. In conjunction providers are also working on leveraging Cloud Computing and Service Oriented Architecture for creating mobile applications.

Google has launched Google Appls Store which is not just for mobile appls but appls that can be accessed and used using browser online. Microsoft is in process of launching Office 365 online for working virtually from anywhere.

All of the above are showing the signs that we are on the journey towards creating and using Pay for use as well as mobile applications more and more. In coming years this would lead to a utility model of using applications based on the needs and opening a new way of using applications from an appstore provider instead of making a new one ourselves every year.

On one side this will give more agility to the business to choose the solutions off the shelf while on the other end it will create more flexibility and control issues to ensure we choose the right appls throughout the company for effective use. This is more important for MNCs adapting the out of box applications then for individuals/small/medium enterprises.

IT is increasingly seen as an essential business enabler as well as value creator + competitive advantage creator. In doing so one of the most important service blocks of IT is applications life cycle management. Within application life cycle management the IT divisions generally use various frameworks and technology platforms to achieve the desired results. The well known ones are,

Rational Unified Process (RUP) for requirements management

PRINCE2 / PM BOK for project management

ITIL for service management

Waterfall method for application SDLC

Agile development for agile way of applications management

SOA (Service Oriented Architecture) for modular/component development and making them available as loosely coupled to be used as service

In the area of technology platform there is a vast list. Some of the heavily used ones are,

Microsoft .Net

Android

Apple iOS

Java/J2EE

MS SQL/MY SQL

Oracle

Many more…

On the other side we have seen the increase is standard out of box applications that we use day in and day out to get our daily activities done. A few examples of the same are,

Microsoft Office Suite

SAP (with needed customizations)

Microsoft Sharepoint

CA Clarity Tool

HP Open View Service Desk Tool

Many more…

The latest trend shows a start in applications turning more and more out of the box for day 2 day activities and collaboration needs. More and more business starting with individuals, small & medium enterprises are going towards using standard out of the box applications to keep their appls maintenance and development costs under control. The MNCs (Multi Nationals) have started moving towards the same for the so called Utility applications.

The advantages seen in using standard out of the box applications are,

No internal development and maintenance team required

The standard functionality ensures easy upgrades and updates

Market standards are adhered to much easily

License costs benefits due to volume

Easier user training with standard vendor provided training materials

Easier acquisition on boarding to One company standard appls

The disadvantages to be handled are,

The standard appls vendor’s existence in market. If the vendor is small can be easily take over/go bankrupt

No control over how fast the issues & changes reported will be resolved and in which release

Very tight control on changes/customizations, all has to be within the boundary of what the standard appls environment allows

License costs year over year can increase/ License model can change for major releases

Data migration from other systems to standard systems could be very time consuming, complex and costly

The applications future continues to evolve and we already see many businesses moving in the standard out of the box applications for their day to day activities and collaboration needs. It is slowly moving towards adaptation of “Software as a Service”, pay for use model.